Web-based healthtech startups have invention risk. Surprise!

As readers of this blog know, I am interested in the potential of novel social networking and other internet-age techniques to transform our creaky healthcare system. A particularly intriguing class of startups is using these social techniques to change the behavior of patients in ways that lead to better health. For example, helping people to eat less, or avoid pre-diabetes, or manage their medication better, or avoid hospital readmission by taking better care of their heart disease.

The exciting thing about these web-based startups is that they use Lean startup methodology, have low capital requirements, and are staffed with young, energetic, change-the-world types.

And, putting on my investor hat, they have market risk perhaps, but no invention risk, because all this internet stuff is engineering right?

So, I was quite surprised recently, when I had reason to think more carefully about this class of companies, to realize that I think they do indeed have a pretty substantial invention risk. And interestingly, most of the ones I have looked at don’t realize they have invention risk, and are not managing their businesses as if they have invention risk. That is a worry. [Read more…]

Invention risk makes lean science startups different

A hallmark of new ventures that are based on scientific advances in fields like medical devices, health tech, or cleantech is that they often have invention risk. Frequently they also have market risk.

InventionAnd while the standard venture capital reaction to startups with both market and invention risk is “come back when one of the risks has been eliminated”, I find them exciting, have been involved with quite a few of them over the years, and am always looking for ways to optimize the rate of risk reduction per dollar invested.

For the last 18 months I have been trying to apply / modify the principles of lean startup and customer development to a handful of companies I have been helping, each of which has a healthy amount of invention risk as well as a dollop of market risk. I have gained some insights that I have not seen discussed elsewhere, and thought I would share them.

And lest you think invention risk only applies to hardcore science projects, one of the most counter-intuitive things I have come to realize (here) is that many of the new, web-based healthtech startups that aim to change patient behavior, and thereby improve healthcare, have a very high degree of invention risk (as I define the term).  [Read more…]

Democratization of healthcare innovation: Stethocloud

StethoCloudHere is a summer story that is a counterpoint to the daily gloom and doom in the news. It’s about healthcare innovation, unlocked by some of my favorite trends: democratization of innovation;  low-cost startups; and the “death of geography”. On reflection, I am reminded of just what powerful drivers of better medicine and reduced healthcare costs these trends can be if they are allowed to flourish.

The story starts in mid-July, when I saw these two thought-leader tweets:

Crowdfunding: more work needed

Crowd-funding challenges

Nice post yesterday by “Startup Iceland” on the challenges of creating a robust Crowdfunding platform. This concept is certainly resonating way beyond the normal Silicon Valley world!

The author acknowledges some of the issues that are scaring various pundits in the blogosphere, and might make crowdfunding “risky”. He mentions:

  • Information asymmetry;
  • Valuation issues;
  • High cost of transparency and accountability.

His conclusion: more work needed. But soluble.

[Read more…]

Crowdfunding and the Nanny State

Lots of activity in the blogosphere this week on Crowdfunding, coinciding with debate in the Senate of the so-called JOBS bill (HR3606), which contains various provisions relating to Crowdfunding. I wanted to comment on some of the different perspectives, and in particular, on a series of recent posts in one of my favorite blogs, Baseline Scenario. [Read more…]

Runaway healthcare costs create opportunities

We all know US healthcare costs are growing at a rate most consider unsustainable. If you accept the premise that a lot of time and attention will be focused over the next decade on ways to improve healthcare quality and reduce costs (or perhaps reduce costs without reducing quality?), then there are likely to be some big changes in a very large industry, and that is likely to open up some opportunities for energetic entrepreneurs who can think a little ahead of the curve.

Well, at any rate that is the thesis of a project I am working on. I am going to be spending some time digging into this topic. The end goal is to see if we can figure out some promising areas for entrepreneurial focus. But first, we need to explore the facts a bit deeper. I am going to be capturing some of the initial results in a series of posts here, as I think they may be useful to a broader audience. The first question I am going to explore is “Just where is all that money going, and why are costs growing so fast?”.

If you are interested in getting involved with this project, helping, sharing ideas, or getting access to later portions of the work, please let me know by signing up here.

The healthcare cost series

  1. Healthcare cost growth analysis (1)
  2. Eating the seed-corn of healthcare?
  3. Top healthcare cost categories
  4. Hospitals “bent the cost curve” in the 90’s.
  5. Will Managed care return?
  6. Who pays for US healthcare?
  7. Disease through the eyes of an accountant (which diseases cost most)
  8. Disease economics drill down (top clinical conditions)
  9. Disease economics details: heart disease (coming)
  10. Disease economics details: asthma (coming)
  11. Disease economics details: back pain (coming)

Crowdfunding and the ninety nine percent

I have been following the idea of “crowd-funding” for several years and am a great fan. A couple of weeks ago I was having lunch with a colleague who is starting a new crowd-funding site. As we discussed it, I realized that crowd-funding represents an antidote to one of the many ways in which today the “ninety nine percent” are disadvantaged compared to the “one percent”. I have not seen this particular line of thought articulated before, so here it is.

In case that introduction sounds too rabid, let me qualify this post by saying I am not really a fan of Occupy Wall St (OWS), I have no problem with the 1% earning lots of money (so long as the taxpayer is not acting as bailer-out of last resort), and I am myself an accredited investor, long-time startup entrepreneur, and occasional angel investor. I dont believe in equality of outcomes, but I believe very strongly in equality of opportunity. And that is where I see an intersection of crowd-funding, and the concerns of movements like OWS. [Read more…]

“Lean” medical device, cleantech, telco startups

The Lean Startup movement is a good example of the new internet-company methodologies mentioned in my last post. I got around to reading Eric Ries’ book over Thanksgiving. I liked it a lot, and I have been mulling over what its lessons are for non-internet businesses – particularly for the sort of science-based business I am interested in (medical devices, cleantech, telecom infrastructure).

Does “Lean” need tweaking for science-based startups?

It seems to me that there are several important topics here:

  • Regulation.
  • The number of available early adopters, and ease/cost of access.
  • Speed of each iteration cycle.
  • Metrics.

[Read more…]

Reinventing the Board Meeting

Very relevant blog by Steve Blank on Reinventing the Board meeting for startups. I think the concept we call here [at Acceleration Co-op] the “Virtual Advisory Board” is targeted at many of the issues mentioned in the blog posting, although we have been focusing on advisory boards rather than Boards of Directors. [Read more…]

Bridges to Silicon Valley from other countries

Spent the last couple of days at an interesting conference called Incubate 2.0, organized by Startup Cause. The idea was to discuss how various initiatives to “help entrepreneurs” might collaborate/work together/learn from each other.  [Read more…]

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